Over half (58 per cent) of pension professionals think that RPI reform should go further than simply switching to CPIH with no compensation, new research has revealed.

The Society of Pension Professionals (SPP) found that this subset was equally divided, as 29 per cent thought that RPI should be aligned with CPIH with compensation, whilst the remaining 29 per cent stated that RPI should switch to an adjusted index.

However, 69 per cent expected alignment to CPIH, with no compensation, to be the outcome in reality.

Equally, whilst nearly half (46 per cent) of respondents thought that any reforms should take place by 2025, over 80 per cent thought that the changes would not actually take place until 2030 or later.

The survey also collected views on the most serious issues that could impact pension schemes as a result of the changes, with 50 per cent citing the impact on funding positions and a fall in asset classes as the most pressing concern, at a weighted average rating of 3.4.

This follows recent analysis by Barnett Waddingham, which warned that schemes who have acted to protect their funding levels could be most at risk to a "significant" fall in funding levels if RPI and CPIH are aligned.

However, research by Willis Towers Watson (WTW), revealed earlier this year that most companies with large pension schemes had made an allowance for the proposed changes in their 2019 accounts.

A reduction in member benefits was close behind though at an average rating of 3.3, while practical implications such as added pressures on administrators or communications were considered to be of the least concern at 2.7.

Commenting on the findings, Society of Pension Professionals president, Paul McGlone, said: “What is clear from our survey is that there still a lack of consensus on the most suitable replacement for RPI or the timescales for implementing change.

"This isn't surprising given the very different impacts that the change has on schemes, sponsors and members.

“The difference between expectations of what should and will happen is interesting, with our membership expecting the change to be more penal then they would like, but to come into force later then they think it should."

He added: “Hopefully the imminent consultation, due to be announced in the budget, will allow the industry to coalesce around a suitable approach. Failure to implement the right reform in a timely fashion could be very damaging to UK pension schemes and their members.

"We would encourage all corners of the industry to engage with the consultation when it launches.”

The joint consultation between the government and UK Statistics Authority (UKSA) on proposed changes to the Retail Prices Index is expected to launch at the budget on 11 March, following delays at the start of the year.

UKSA made the recommendation to scrap RPI in September 2019, describing it as "not a good measure of inflation".

Industry experts have also urged pension schemes to take action to engage with policy makers on the potential RPI/CPI changes ahead of the consultation, describing it as an "immediate concern" for trustees.

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